Thursday, October 27, 2011

India Third Party /Hosting Data Center Market - Major Challenges

Bandwidth cost has come down, but it is higher compared to western countries and today it constitutes 30% to 35% of operational costs of a data center. Three years back bandwidth price was $2000 - $2500 per Mbps per month and presently it is around $500-$700 per Mbps per month but it has to come down to $150 - $200 per Mbps per month to become a viable data center destination. In US band width rates presently are at $100 per Mbps per month. There has been an increase in bandwidth with speeds progressing from 1G to 10G. With the band width pricing falling down in India compared to US many e commerce companies and travel sites have shifted to Indian Data Centers. Several service providers with bandwidth and/or data centre space are entering into the business. Most telecom companies now offer hosting services.

Cooling systems affect the power consumption in the data centers. Dual core and quad core processors in the servers generate hit and directly affects the power required per square feet. Higher-density cabinets and racks in the data centers are expected to increase in the coming years which will affect the density of both power and cooling required to support them. Row and rack-based cooling are the best for higher-density equipments as it helps in reduce energy consumption by 15%. Cooling cost can also be reduced by air conditioning wands that pinpoint critical hotspots in server arrays to a specific temperature and also free cooling wherein external cold air is used to cool the data center. Proper airflow, temperature and humidity in the data centers help reduce the power cost as the power tariffs in India are raising by 10-15% every year. Availability of uninterrupted power supply is one of the major problems that Indian Data Centers are facing. The Government of India estimated the country will require an installed capacity of over 200,000MW by 2012 to meet electricity demand. Its current total installed capacity is about 160,000MW.

Rising real estate costs are another challenge. Real estate costs are higher because most of the data centers are set up near to the metropolitan and major cities and most of the clients are not keen in having their data centers far away near to smaller cities and town where the cost will be less. Most of the data center clients in India are BFSI, Manufacturing. Mumbai is the financial hub; Delhi has most government and public sector establishments and real estate prices in IT cities such as Bangalore and Hyderabad are also rising. Government can help the data center industry in India by providing the network connectivity and improving the power supply to the cities and towns near to the metros and IT hubs.

Virtualization is the key for making data center more efficient and lower costs. It optimizes the usage of critical underlined compute resources, reduces low equipment utilization rates, enables infrastructure consolidation and helps reducing heat and power consumption. Also Green IT practices such as data center virtualization, better data center design and layout and asset lifecycle management, which reduce the need for CAPEX, are becoming increasingly important. Tools are being developed that help in power efficiency and usage calculators, Building management systems, infrastructure management, that help in improving efficiency and reduce costs.

Other challenges for the industry are lack of qualified and skilled professionals who are needed at mid level and higher levels of management of data centers. India has lot of IT professionals experience in other fields but people with data center experience are hard to find. Data centers in India are running at 80-90% capacity and with rising demand Vendors have to look for ways at increasing their capacities fast and at low cost. Setting up full fledged data center takes a minimum of three years to complete and become operational. Data security concerns is another issue as India in the BPO sector has experienced pilferage of data by employees. With rising cost and competition there has also been pressure on the margins of the data center vendors. Cost of adoption and integration of new technologies in hardware, software and facilities management is a concern and vendors have to realign their pricing strategies and business models to maintain the profitability.

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Thursday, October 13, 2011

Global HR Outsourcing, Procurement Outsourcing, Finance & Accounting Outsourcing - Everest Group 2011

Global HR Outsourcing Market 2011
The multi-process Human Resources Outsourcing (MPHRO) market is expected to grow by 8-10 % and will reach $3.35 billion in 2011 from US$3.07 billion in 2010. Cost reduction, compliance and technology are the key drivers for growth. India is the preferred destinations with North American companies followed by European companies are the major outsourcers. BFSI and Manufacturing are the early adopters of HR outsourcing but the trend is presently decreasing in these verticals but picking up in new verticals like insurance, technology, healthcare and energy. Payroll and benefits are common processes in MPHRO contracts and market was earlier affected by global recession in 2009 and market rebounded in 2010 and is expected to continue good performance in 2011. 

Please Click here for Detailed Chart (ACV-2007-2011)

Global Procurement Outsourcing Market 2011
The multi-process Procurement Outsourcing (PO) market is expected to grow by 15-20 % and reach US$1.5 billion in annual contract value (ACV) in 2011. Cost reduction, compliance, savings and technology are the key drivers for growth. North American companies followed by European companies are the major adopters. Manufacturing followed by consumer packaged goods and retail sectors are major outsourcers. Procurement, supply chain processes such as fulfillment and transportation and logistics management are common processes outsourced. 

Please Click here for Detailed Chart (ACV-2008-2011)

Global Finance & Accounting Outsourcing Market 2011
The multi-process Finance and Accounting Outsourcing (FAO) market is expected to grow 15-20 % and reach US$4 billion (ACV) in 2011 from US$3.5 billion in 2010. Cost reduction, compliance, savings and technology are the key drivers for growth. North American companies followed by APAC companies are the major adopters. Manufacturing, financial services, retail, travel and logistics, and energy and utilities are key verticals. Accounts payable, accounts receivable, general ledger, financial planning and analysis are common processes outsourced. 

Please Click here for Detailed Chart (ACV-2008-2011)

Friday, October 7, 2011

Internet Users in India 2011 – Forecast to 2015

History of Internet in India

Videsh Sanchar Nigam Limited (VSNL) launched Internet Services in India in August 1995 and was the sole provider of internet services in India till 1999. In late 1997 after several months of speculation, India’s Department of Telecommunications (DOT) announced a new policy for Internet service providers (ISPs).In November 1998; the Government ended VSNL’s monopoly and allowed provisioning of Internet Services by Private Operators. There are 153 ISPs in operation today, although the majority market share (62 per­cent) remains with the public-sector corporations Bharat Sanchar Nigam Limited (BSNL) (43 per­cent) and Mahanagar Telephone Nigam Limited (MTNL) (19 percent).

India Internet 2011
With penetration level of 8% of 1.2 billion populations online, India is third ranked after USA and China in the list of countries with the most Internet users. Boston consulting Group sees India Describing India as a "low-maturity and high growth market".  India's Internet use is concentrated mainly in the Urban, where many users are migrants from rural. Internet users in India are predominantly college going students(30%), Young men(28%), school going kids(14%). Major activities done, according to Juxt India Online 2011 Report is:

India Internet Users Forecast:

According to Google India Country Head, India has about 100 million Internet users, and the number will increase to 300 million by 2014.

According to BCG India will see its number of internet users triple to 237 million from the 81 million (2010) by 2015.

McKinsey research states that by 2015, the Indian Internet user base would touch 450 million from the 2010 estimates of about 81 million and digital-content consumption can rise as high as $9.5 billion with rising adoption of mobile internet.